It’s a federal election year, which means the last thing politicians in Washington are inclined to do is raise taxes.
But there’s one they should raise, and soon, because there’s so much at stake. And it’s the kind of tax hike that would barely be felt.
The federal gasoline tax has been level at 18.4 cents per gallon since 1993. If it had gone up with the relatively benign inflation rate during that time, it would be 12 cents higher, which is what a couple of U.S. senators have proposed doing — one in two 6-cent jumps, the other in three 4-cent increases.
Current gas prices, at $3.75 a gallon or more, are a lot higher than most of us would want to spend. But there's a bigger issue at play here, one that would justify a modest increase in what we're paying now.
It’s important to raise this tax because of what will otherwise happen: The Federal Highway Trust Fund will go broke. In fact, it will have become depleted enough in just two weeks that the feds will have to start cutting back on aid to the states that's earmarked for highway construction.
If that happens, countless construction projects will grind to a halt and tens of thousands of jobs will start to disappear. Traffic jams will increase, causing an estimated $121 billion-a-year loss in productivity and wasted gas. Roads and bridges already in need of repair will get worse, causing an estimated $505 per vehicle in added repair costs per year. Perhaps of greatest concern, motorists’ safety will be compromised.
When fully implemented, the tax hike would cost the average motorist (driving roughly 12,000 miles) $50 per year. That hardly seems like enough to alter people’s travel habits, including vacationers who support local economies. It would be money particularly well spent in New York, where 23 percent of the roads are rated poor, 40 percent of the bridges are structurally deficient or obsolete, and 45 percent of the major highways are regularly congested.
Every dollar spent on road improvements saves $5.20 in fuel consumption, car repairs and productivity lost to traffic delays. And every $1 billion spent generates 28,000 jobs.
The revenue raised by the bills would be offset by the extension of six of 50 tax breaks due to expire this year. Thus, they would be revenue-neutral.
Unfortunately, not even President Obama is willing to go to bat for a broad-based, albeit small, tax hike like this.
Rather, he’s proposed raising the money by closing tax loopholes. That would be fine, but time is definitely growing short and Washington is not known for agreeing on complicated solutions in a hurry.
A 6-cent gas tax hike would be simple enough and fairest, forcing the biggest consumers of gasoline (and diesel, which would rise comparably) to pay the most.